As someone involved in the construction business, it’s crucial to understand the implications of an Action Over Exclusion. This article aims to shed light on what this exclusion entails and why embracing a collaborative approach to insurance is far more beneficial.
Typically, employees are restricted from suing their employers for work-related injuries due to the existence of Workers’ Compensation Policies. When an employee sustains an injury on the job, the Workers’ Comp policy comes into play, covering the damages. However, it’s important to note that while employees cannot sue their employers, they can hold other negligent parties accountable for their loss.
Let’s consider a scenario where a building owner hires a contractor to perform work on their premises. Unfortunately, one of the contractor’s employees falls off a ladder, requiring medical attention. The injured employee can rely on their employer’s Workers’ Comp policy to cover their medical bills. However, if the employee believes the building owner’s negligence contributed to the accident, they can file a separate lawsuit against the owner. Typically, the contract between the building owner and the construction firm includes provisions demanding that the contractor indemnify and hold the owner harmless.
Now, if there is no Action Over Exclusion, the building owner is protected by the contractor’s policy. In the event of a lawsuit, the contractor’s policy would be triggered, and the building owner’s interests would be defended. However, if an Action Over Exclusion is in place, the building owner would not receive coverage, even if they are listed as additional insured on the policy certificate.
States like New York place the ultimate responsibility on the general contractor and building owner. Consequently, building owners should be particularly cautious when it comes to engaging firms with Action Over Exclusions. Furthermore, personal injury attorneys aggressively advertise, encouraging injured employees to pursue lawsuits. This dynamic makes the issue even more relevant and building owners, property managers and general contractors hiring subs should be made aware of.
Ultimately, when bidding on a construction project, presenting a policy with an Action Over Exclusion sends a message to the general contractor and building owner that you are unwilling to support them if a problem arises. Consequently, they are going to be less inclined to engage in business with you. While your policy may have ample liability limits, its application fails to safeguard your collaborative partners.
In conclusion, emphasizing collaboration and a commitment to shared responsibility is essential in the construction industry. By demonstrating a willingness to protect and support your partners, you enhance your reputation and increase your chances of securing fruitful partnerships in the future.
